The Market Today - 24 August 2017
Non-oil income drags August revenue lower
Revenue accruing to the Federation Account Allocation Committee (FAAC) came in at ₦468 billion in August, indicating a decline in revenue from the ₦652 billion shared in July. Notably, oil export sales for the Federation increased by $62 million following a rise in export volumes by 1.20 million barrels. However, non-oil revenue came in lower, driven by weaker Companies Income Tax collection during the period following the expiration of the deadline for filing tax returns. Overall, the Federal Government received ₦193 billion, states received ₦130 billion and local governments received ₦98 billion. With Nigeria’s oil production resilient above 2 million barrels a day and oil production still higher than last year’s levels, we expect oil revenues to support Federation income over the coming months.
Choppy session ends in the green
Following a choppy trading session, the Nigerian bourse managed a green close in yesterday’s session – with the ASI up 26bps. The intra-day trading chart showed that a see-saw trading pattern pervaded the equity market in yesterday’s session, albeit with a slightly bullish bias. We expect this mixed sentiment to persist as the week progresses.
Stock Watch: ACCESS released impressive H1’17 earnings results yesterday with PAT up 17% y/y but 4% below Vetiva estimate. The Board of directors declared an interim dividend of ₦0.25/share. The stock gained yesterday (+396bps) and currently trades at ₦10.24, returning 74% Ytd.
Bond market trades bearish amidst auction
The DMO conducted a bond auction yesterday, with the ₦56 billion sale coming in below the ₦135 billion offered across the 5-year, 10-year and 20-year tenors at stop rates of 16.80%, 16.80 and 16.90%. Amidst the auction, sentiment in the bond market turned bearish with sell pressure weighted on the short end of the curve. However, activity on long-dated tenors remained tepid. With the ₦95.6 billion OMO maturity expected to boost liquidity, we foresee strengthened demand in the T-bills market barring any CBN liquidity mop-up. Meanwhile, given the weak demand at the bond auction, we foresee tepid trading in the bond space today.
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